© Reuters. FILE PHOTO: A branch of Crédit Agricole is seen in Warsaw, Poland, on July 3, 2018. REUTERS/Marcin Goclowski
PARIS (Reuters) – Crédit Agricole (OTC: ) is targeting a net profit of more than 6 billion euros ($6.3 billion) by 2025, the bank said on Wednesday as it unveiled a new strategy Great potential business plan in Italy.
France’s second-largest listed bank had underlying net income of 5.4 billion euros last year and expects annual revenue to grow by an average of around 3.5% in 2021-25 – with growth coming from large customers, specialist financial services such as car rental, and Italy Business.
Analysts said revenue and profit targets beat market expectations, but the bank kept its payout ratio at 50% — lower than rivals, several of which recently launched share buybacks — and made no promises to cut bolder cost, which disappointed investors.
“We found cost guidance a bit dull,” Jefferies analysts said in a note. Shares in the bank fell more than 2 percent.
The bank expects its retail customer base to grow by more than 1 million by 2025, with a target return on tangible assets of more than 12%.
It added that about 20 billion euros would be allocated for information technology and digital spending during this period.
Executives singled out Italy, Crédit Agricole, which recently acquired smaller peer Credito Valtellinese, and also holds a 9.2% stake in Banco BPM, as future growth drivers.
Deputy CEO Xavier Musca gave no details other than to say that the bank can grow strongly in Italy and sees a long-term development path in the country.
The stake purchase in Banco BPM has sparked takeover speculation, with some sources mentioning a possible closer relationship with Monte dei Paschi di Siena.
Muska poured cold water on the rumours, saying nothing about the Tuscan lender was on the table.
The French bank had expressed interest in investing in Banco BPM’s insurance business, but Musca said there had been little progress so far.
“It’s an open process. BPM has asked a certain number of insurers to advise on the acquisition of insurance partnerships they have with other companies… This applies to life insurance as well as property and casualty. At this stage, BPM How the possible acquisition will work has not been fully decided,” he told reporters.
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